What is exempt from sales taxes in Texas?

Many states have special sales tax rates that apply to the purchase of certain types of goods, or fully exempt them from the sales tax altogether. Here's how Texas taxes five types of commonly-exempted goods:

Are services subject to sales tax in Texas?

"Goods" refers to the sale of tangible personal property, which are generally taxable. "Services" refers to the sale of labor or a non-tangible benefit. In Texas, specified services are taxable.

About the Texas Sales Tax

The state of Texas has relatively simple sales tax rate, and utilizes a flat state tax rate. However, the local cities, counties, transit authorities (with the exception of school districts), and special purpose districts do have the ability to charge local taxes, which will vary depending on location. These local tax rates would be in addition to the state rate. Local jurisdictions also have the ability to impose some other additional taxes if they so choose, which would be cumulative with the state taxes of the same nature.

Is the Texas Sales Tax Destination-Based or Origin-Based?

Texas is a origin-based sales tax state, which means
sales tax rates are determined by the location of the vendor, not by the location of the buyer. The origin-based method of determining sales tax is less complicated for vendors than destination-based sales tax, because all in-state buyers are charged the same sales tax rate regardless of their location.

Is Texas a Streamlined Sales Tax State?

Texas is not a member of the Streamlined Sales and Use Tax Agreement. The SSUTA is an agreement adopted by about half of states that ensures that their sales tax laws are simplified to lower the costs associated with compliance.

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